Honda to Shift Acura Production from USA to China Amid Trade War

Japanese automaker Honda will reportedly increase output of its Acura luxury vehicles in China by switching to local production of a new RDX SUV, rather than importing it from the United States. Sales of the new China-made Acura RDX will start towards the end of this year.

Vehicle imports from the USA are subject to 40% tariffs amid escalating trade friction between Washington and Beijing. Other automakers may take similar steps to avoid the raised tariffs.

Honda manufacture automobiles in China through two joint ventures– Guangzhou Automobile Group and Dongfeng Motor Group. Its total vehicle sales in China reached 1.45 million units in the year ended March 2018, accounting for about 30% of the company’s total output. China is Honda’s second largest production country after USA, where it produced 1.64 million in the same year.

Production of the new RDX, a medium-sized SUV, started recently at a Guangzhou Automobile plant. Previous versions of the model that were sold in China were imported from USA. Honda began considering switching to Chinese production before July, when Beijing and Washington started imposing retaliatory tariffs. By shifting production, Honda aims to improve cost competitiveness and capture more local demand.

China in July lowered tariffs on imported vehicles to 15% from 25%, except for U.S.-manufactured cars, for which levies were raised to 40%. The vehicles themselves will be free from the higher tariffs, although some components will still be imported from the U.S. and thus be subject to the levies.

Honda expects the new model to be about 20% cheaper than the previous version, which is priced at 399,800 yuan ($57,400).